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story.lead_photo.caption New allegations against the Chinese technology firm Huawei include that the company and its affiliates worked to steal trade secrets from six unidentified U.S. companies. (AP/Mark Schiefelbein)

WASHINGTON -- The U.S. government has charged Huawei and two of its subsidiaries with federal racketeering and conspiracy to steal trade secrets from American companies, a significant escalation in the government's legal fight with the Chinese telecommunications company.

In a federal indictment unsealed Thursday, the Department of Justice accused Huawei and its affiliates of a "pattern of racketeering activity" and said the companies had worked to steal trade secrets from six unidentified U.S. companies. The stolen information included source code, as well as the manuals for wireless technology.

"The new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People's Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei's business," the Justice Department said in a news release.

The new charges add more weight to Washington's pressure campaign against Huawei, which is already barred from buying many American products and is viewed by the Trump administration as a threat to national security. The escalation is also part of a broader attempt by the Trump administration to crack down on what it says is a pattern of Chinese espionage and theft aimed at giving Beijing a technological edge.

On Monday, four members of China's military were charged with hacking into Equifax, one of the nation's largest credit reporting agencies, and stealing trade secrets and the personal data of about 145 million Americans in 2017.

The new indictment goes beyond the Justice Department's earlier allegations of trade-secret theft and sanctions violations.

It applies a federal racketeering law that has historically been used to bring down mob leaders and gang kingpins and allows the government to lodge charges that would otherwise fall outside the statute of limitations. The criminal conspiracy that Huawei is accused of carrying out has been going on since at least 1999, according to the Justice Department.

The indictment portrays Huawei as orchestrating a steady, if not sophisticated, campaign to steal trade secrets. For instance, the indictment alleged that in 2004, a Huawei employee sneaked back to a Chicago trade show to steal a competitor's technology. The employee "was discovered in the middle of the night after the show had closed for the day in the booth of a technology company" and was found "removing the cover from a networking device and taking photographs of the circuitry inside." The individual wore a badge listing his employer as "Weihua" -- an anagram of Huawei -- according to the indictment.

A spokesman for Huawei did not immediately respond to a request for comment.

Last year, the Justice Department charged Huawei's chief financial officer, Meng Wanzhou, with outlining a decade-long attempt by the company to steal trade secrets, obstruct a criminal investigation and evade economic sanctions on Iran. Meng is in Canada, out of jail on bond and awaiting extradition to the United States. She is under 24-hour surveillance and must wear a GPS tracker on her ankle.

The White House has looked to ratchet up the pressure on Huawei for years, with members of Congress from both parties backing its efforts. The new charges may give more fodder to the company's critics on Capitol Hill, who have been pushing to make sure Huawei has no role in the next generation of wireless networks, known as 5G.

"The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law," said the top lawmakers on the Senate Intelligence Committee, Sens. Richard Burr, R-N.C., and Mark Warner, D-Va.

Under President Donald Trump's administration, the Justice Department has focused on combating an array of threats that China poses to the United States and its allies in the West, including theft of trade secrets and espionage, as the country seeks to expand its sphere of economic and military power.

Huawei, whose equipment powers telecom networks, sits squarely at the center of both those concerns.

Intelligence community analysts say Huawei can use its network equipment to monitor traffic across a network and potentially engage in unlawful surveillance.

Huawei is also the leading supplier on every continent except for North America of equipment for 5G networks -- an advanced telecommunications network that will underpin telecommunications and advanced technologies like self-driving cars.

As countries around the world migrate their communications systems to 5G, and as more technology innovation is built on top of it, Huawei is in a position to gain a huge economic edge over U.S. tech giants, which have long been at the forefront of innovation and have lately powered the U.S. economy.

Attorney General William Barr said last week that the Chinese government was using "every lever of power to expand its 5G market share" because it would gain ground in every technology that then touched 5G.

"Our economic future is at stake," Barr said in a speech during a conference in Washington on threats that China poses to the United States. "The risk of losing the 5G struggle with China should vastly outweigh other considerations."

Business on 02/14/2020

Print Headline: Huawei facing racketeering case


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